Caribbean Utilities Company is still in recovery mode from Hurricane Ivan, but reports a 4.01 per cent increase in revenues.
Net earnings for the first quarter were $7.1 million, or $0.26 per common share, compared to $6.3 million, or $0.23 per common share, for the same quarter last year.
A statement from CUC said the primary reasons for the year-over-year improvement are CUC’s business interruption insurance claim from Hurricane Ivan and increased foreign exchange earnings.
There are still about 1,500 CUC customers who remain without electricity because of Hurricane Ivan.
The vast majority of these customers are residential, as many homes and condominium complexes are still undergoing repairs. They will be reconnected as they are completed.
CUC has also announced an annualized dividend of US$0.66 per share. The dividend will be payable 19 September to shareholders of record as of 6 September.
In releasing its unaudited financial results for the first quarter, CUC announced operating revenues (including fuel factor revenues) for the quarter were $31.8 million, compared with $30.5 million in fiscal 2005, representing a 4 per cent increase. Electricity sales for the first quarter were $21.6 million, or about 90 per cent of $23.8 million in first quarter 2004/05.
The company expects electricity sales to continue to rebound and achieve 100 per cent of pre-Ivan sales by the end of this fiscal year.
Fuel factor revenues rose 51 per cent from $6.7 million to $10.2 million this year because of higher fuel prices.
CUC’s licence with the Government provides for adjustments to be made to the charges billed to customers to reflect variations in the cost of diesel fuel used in the generation of electricity. Such monthly adjustments allow the company to recover the variations in the cost of fuel from consumers.
CUC and the Government jointly announced earlier this year that they have agreed on a cost recovery surcharge to be implemented by the company for purposes of recovering its uninsured hurricane-related losses. The CRS will begin with CUC’s August billings. A flat charge of $0.0089 per kilowatt-hour will be applied to all customers, which equates to a 4.7 per cent average rate increase.
The agreement to forego a part of the permitted 9.5 per cent rate increase allowed under its licence is without prejudice to CUC’s rights and privileges under its licence, and is specific to the Hurricane Ivan-related costs and losses only. Any costs or losses resulting from any future catastrophic event would be subject to recovery under the terms of either the existing or any future licence or upon terms to be agreed at that time.
The CRS is expected to appear on CUC customers’ bills for about three years. During the three-year CRS period, CUC has agreed with Government that there will be a freeze on basic billing rates until 31 July, 2008. Also, there will be no retroactive increase in basic billing rates after the full recovery of the CRS.
By agreement with Government, CUC will recover $13.4 million of the $14 million uninsured losses. In addition, CUC will absorb $3.6 million of indirect costs (such as consultant fees, insurance reinstatement premium and increased bad debt provision) incidental to the hurricane. These costs have been booked in fiscal 2005.